You have been asked to continue your work on the Spring Fit Corporation audit. The journal entries for the current year are shown as follows: Journal Date Description Debit Credit Jun. 30 Interest Expense 18,427 Premium on Bonds Payable 2,948 Cash 21,375 30 37,403 Interest Expense Discount on Bonds Payable Cash 5,903 31,500 30 1,800,000 Bonds Payable Gain on Redemption of Bonds Discount on Bonds Payable Cash 41,000 59,030 1,699,970 Dec. 31 Interest Expense Premium on Bonds Payable Cash 18,427 2,948 21,375 31 74,257 Retained Earnings Interest Expense 74,257 31 475,000 23,584 Bonds Payable Premium on Bonds Payable Loss on Redemption of Bonds Cash 20,600 519,184 Final Questions Considering the journal entries for both years, answer the following questions. 1. Were the bonds in the entry on Dec. 31 of Year 2 redeemed at maturity? 2. You suspect there is an error in one of the bond redemption entries. Assuming that the amounts are correct, which entry is questionable? Why? 3. Why do some bonds sell below face value? 4. Which of the following items are amortized? a. Bonds b. Discounts c. Future cash receipts d. Redemption amount e. Premiums f. Contract rate of interest g. It depends on the face value of the bond h. Interest expenses You have been asked to continue your work on the Spring Fit Corporation audit. The journal entries for the current year are shown as follows: Journal Date Description Debit Credit Jun. 30 Interest Expense 18,427 Premium on Bonds Payable 2,948 Cash 21,375 30 37,403 Interest Expense Discount on Bonds Payable Cash 5,903 31,500 30 1,800,000 Bonds Payable Gain on Redemption of Bonds Discount on Bonds Payable Cash 41,000 59,030 1,699,970 Dec. 31 Interest Expense Premium on Bonds Payable Cash 18,427 2,948 21,375 31 74,257 Retained Earnings Interest Expense 74,257 31 475,000 23,584 Bonds Payable Premium on Bonds Payable Loss on Redemption of Bonds Cash 20,600 519,184 Final Questions Considering the journal entries for both years, answer the following questions. 1. Were the bonds in the entry on Dec. 31 of Year 2 redeemed at maturity? 2. You suspect there is an error in one of the bond redemption entries. Assuming that the amounts are correct, which entry is questionable? Why? 3. Why do some bonds sell below face value? 4. Which of the following items are amortized? a. Bonds b. Discounts c. Future cash receipts d. Redemption amount e. Premiums f. Contract rate of interest g. It depends on the face value of the bond h. Interest expenses